I know real estate practitioners aren’t lawyers, thank God, but I would strongly suggest that all practitioners get a copy of Black’s Law Dictionary and learn where they could run into pitfalls. Look up the legal definition of the words we so commonly use every day in our "written transactions" (AKA: "commitments", being legally enforceable in a court of law, more commonly called: contracts). Unfortunately, we must know the horrific legal repercussions we could face in this sue you for anything world. At least this must be remembered, lawful contracts have a begining and an end, always.

    I also know we’re not supposed to practice law, here's the disclaimer rhetoric: get a lawyer if you are intimated in to doing such, but here is what I do: In the purchase agreement I put in a clause that says something to this effect:

     “Sale is contingent upon (don’t put in subject to, that’s a whole different ball game) buyer obtaining and qualifying for a new loan(s) for 30 years at the prevailing rate of interest at the closing of escrow. Said loan(s) is/are not to bear any prepayment penalties, variable rates of interest or discount points due from the buyer or the seller.”

    Sure it takes a little more effort on the real estate practitioner’s part, but right up front the lender/broker will see that clause and so will the underwriter, which makes producing a loan contrary to what was requested a severe legally enforceable breach. I don’t know how far one could legally take any such breach of this nature, but I’ll bet the state mortgage broker registrant would be very interested in the practice and so would the real estate commissioner.

    The next thing needs to be on the selling practitioner’s letterhead and sent certified (that’s right certified) with a return receipt requested to the lender/broker stating they are aware of the loan conditions (quote the conditions for them) and that they have two days in which they are to reply in writing that they can and will in fact produce such a loan based upon the loan applicant’s, your buyer, wishes. Make the lender/broker sign an acknowledgement to the structure of the loan stated in the purchase agreement when the loan application is being made. Put that agreement into escrow as an attachment to your “Broker’s Demand” and keep the original in your files. The lender/broker will be very careful to comply with the buyer’s wants.

    Also, for “gosh” sakes, don’t depend on “Pre-Approval Letters” from lender/brokers as having any value. My four-year-old grandson can draft a pre-approval for a buyer. I rarely use the “pre” letters, unless someone specifically asks for one. These letters hold no water and cannot be depended upon. You pre-qualify your buyer. Pre-approving a buyer is your job.

    Prepare your buyer for his interview with the lender. Many people don’t believe they can get a loan and are very unnerved about talking with the lender and asking for an unimaginable amount of money. Tell them what to expect and help them through this thing. Buying a home is generally the largest transaction John and Mary will ever encounter. It’s a major deal for them. Help them be comfortable with it.

    There are ways you can gracefully pre-qualify the buyer without stepping on toes or his knowing to determine if he can pay or not. My first theory is don’t write contracts or show property to people who can’t buy anyway. When you do this, you’re defeating your purpose and defeating them emotionally, which isn’t fair to them.

    My second theory is: it is my responsibility to be in control and knowledgeable of my business. I’m not here to play games. Make any sense? Simply ask buyers the same questions the lender/broker is supposed to ask, but ask them in a “graceful” manner. As an example, in casual conservation ask: John where do you work? When he tells you and he will, say: Or really I know someone that does that (if you do). Have you been doing it long? That’s great John; since you have such a nice high paying job, I’ll bet Mary loves to be a stay at home mom? See where it is going? To do them justice, you must get to know them like your own. Just love them and you’ll do them a fantastic service and provide a wonderful home for them that will perfectly fit their needs and pocket. You’re not being deceptive, your making a friend and preparing the groundwork to do the absolute best for them.

    Our job is simple, make money and help buying and selling clients grow and prosper. We have been blessed with a wonderful opportunity. We get paid really big financially and personally for helping people be blessed with a good life. If you must have the lender do your job, get a pre-qualified letter accompanied by a loan commitment if it can be produced and spend the next 30 to 45 days worrying. You might spend the time worry about the wrong thing; your commission rather than if your clients are getting all that is best and possible for them.

    Unfortunately, the lending business can be good and it can also harm those that have perfect credit destroying their wherewithal to purchase a home if you don’t do your job.

    Another part of the Realtors® and mortgage brokers job is protection. We’re in the protection racket. We protect our clients from the wolves and snakes. Wow! there’s a lot of slinky, creepy, crawling things out there.

    It seems the general practice for lenders, and allowed by many loan brokers romancing their commission and fees, is to pull some kinky last minute underwriting and lousy loan processing that cost the seller and buyer time and money. I’ll bet if you have had one transaction or more at the very last minute a loan showed up the buyer didn’t ask for the day after closing was supposed to happen. I’ll bet the instructions to the lender were probably verbal, or worse yet, no instructions were given at all. Yuk!

    I would like to quote a well known mortgage broker from a response to my email: “You are absolutely correct that lenders try to force clients to take loans they do not want." Did you notice the pain you felt when your read the word "force"? This mortgage broker is as honest as the day is long and tries the very best to hold lenders and their unreasonable demands in check as much as possible. This broker also knows that the lender will invariably push past closing and tries to avoid “lender bite” with a voracious passion for clients. This broker also knows and understands what the lenders desire of the mortgage brokerage business and what lenders think about loan brokers, which is at this stage of the game, a necessary evil to be tolerated until real estate brokers and mortgage brokers can be disposed of.

    On the other hand, the mortgage broker should send any loan back that is contrary to the original client wants to the lender and simply say. “I’m sorry, but I will not participate in your attempt to use my clients as your prey” and then ask them to write the docs correctly.

    Realtors® and mortgage brokers need to realize that the lenders, (those who actually fund the loan) are out to destroy their business. Lenders currently have many bills in the legislature designed to make competition so very competitive that they put Realtors® and mortgage brokers out of business.

    Isn’t it interesting these lenders so commonly push past the loan docs closing looking for prey? Someone needs to wake up. What the lenders plans mean to the public, Mr. and Mrs. John Q Homebuyer, and Super Investor, is higher costs and less recourse if a suit is necessary and for the final blow, no profit or progressive growth for anyone but the lenders. This is poverty. I heard somewhere this saying "What does it profit, my brethern, if a man gain the whole world and lose his soul?".

    My simple question is: do Realtors®, mortgage brokers and the real estate buying and selling public have a common enemy? I believe so.

    Check out this definition:

    Maybe this is why we are commanded to be the lender without charging usury (interest) and not the borrower? The head and not the tail? However, I would like to clarify, for the record, not every lender's employee meets these gory qualifications, but we need to be cautious for our client’s sakes because the lending system does.

    We are in a debt-ridden society. I might suggest only use debt for your gain. Get rid of excessive debt, such as continuing balances on credit cards. Always pay your mortgage payment one month in advance. Pay an extra principal amount monthly on any mortgage, doing this will reduce your mortgage by an average of several hundred thousand dollars overall and reduce the length of the loan about 60%. (A 30-year mortgage loan will be paid in full in about 12 years.) Establish the habit of using cash, not credit cards or debit cards. Debit cards are the precursor to habitual credit card debt, by practicing the “ease” of using little plastic cards. (Very effective training tool. Like teaching a little kid the absolute basics that develop lifetime habits.) Don’t worry, one day you will be given the choice having these little plastic cards implanted in your hand or forehead under the guise as the "ultimate convenience". This will be readily accepted, after all, everyone is doing it.

    In order to hold these predatory lenders in check the buck always stops with us, the Realtor® and/or mortgage broker. Knowing the undeniable truth and seeing the results of debt, we have no excuse or justification we can rely on when we allow the predators to take our clients as their "game" and prey…………………………

So much for that.

Ron “Boots” Stacey Your Friend.................

P.S. Click here to read my page - Beware Of "Subject To" Clauses